Moore v. Williams, C 94-0097.

Citation902 F. Supp. 957
Decision Date29 September 1995
Docket NumberNo. C 94-0097.,C 94-0097.
PartiesCarl MOORE, Administrator of the Sheet Metal Workers' National Pension Fund, and the Sheet Metal Workers' National Pension Fund, Plaintiffs, v. Edward I. WILLIAMS, et al., Defendants.
CourtU.S. District Court — Northern District of Iowa

COPYRIGHT MATERIAL OMITTED

John O'B. Clark of Highsaw, Mahoney & Clarke, P.C., Washington, DC, and Roger Stone of Simmons, Perrine, Albright & Ellwood, L.L.P., Cedar Rapids, Iowa, for Plaintiffs.

Joseph F. McDonough of Manion, McDonough & Lucas, P.C., Pittsburgh, Pennsylvania, for Defendant Edward I. Williams.

MEMORANDUM OPINION AND ORDER REGARDING DEFENDANT WILLIAMS'S MOTION FOR PARTIAL SUMMARY JUDGMENT

BENNETT, District Judge.

This litigation involves, inter alia, claims under ERISA that one of the defendants breached his fiduciary duty to the plaintiff pension fund. That defendant, while denying that he was a fiduciary of the fund, asserted in a counterclaim that, pursuant to an indemnification agreement, he was entitled to indemnification for and advance of his attorneys fees and other litigation expenses from the pension fund to defend against the pension fund's claim that he breached his fiduciary duties. The defendant has now moved for partial summary judgment solely on his entitlement to advancement of legal fees.

I. INTRODUCTION

Plaintiffs Carl Moore, as Administrator of the Sheet Metal Workers' National Pension Fund, and the Sheet Metal Workers' National Pension Fund itself ("the Fund"), filed the complaint in this matter on April 29, 1994. The complaint is in five counts, only two of which allege causes of action against defendant Edward I. Williams. Those counts allege that Williams, during his employment with the Fund, was a "fiduciary" of the Fund under § 3(21)(A) of the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1002(21)(A), and that, as such a fiduciary, Williams breached his fiduciary duties to the Fund under § 404(a)(1)(B) of ERISA, 29 U.S.C. § 1104(a)(1)(B), in various ways during the years 1989 and 1990.

Williams answered the complaint on July 11, 1994, and asserted with his answer a counterclaim for attorneys' fees and costs and demanding judgment for "all amounts, including attorneys' fees and costs, incurred by Williams as a result of plaintiffs' failure to provide indemnity." Williams's counterclaim is founded on a September 22, 1993, Amended and Restated Agreement and Declaration of Trust ("Agreement"), which he alleges requires the Fund to indemnify him for and advance to him the costs of defending this action. The plaintiffs filed a reply to Williams's counterclaim on August 3, 1994, denying the existence of an agreement to indemnify Williams and asserting, in the alternative, that Williams is not entitled to indemnification "because Williams breached his obligations to the Fund."

On October 11, 1994, Williams moved for partial summary judgment as to part of his counterclaim. Williams asserts that there is no genuine issue of material fact that the indemnification Agreement exists and is applicable to him, and that he is entitled, as a matter of law, to advancement of legal fees pursuant to that agreement. Williams contends that the Agreement is clear and unambiguous, and both permitted and encouraged by law and public policy. Williams asserts further that the plaintiffs' defense of Williams's alleged breach of obligations to the fund is no defense to advancement of funds prior to determination of his liability on the breach of fiduciary duty claim.

On November 17, 1994, plaintiffs resisted Williams's motion for partial summary judgment. Plaintiffs contend that there is a genuine issue of material fact as to whether Williams is a fiduciary of the Fund, and hence a genuine issue of material fact as to his entitlement to advancement of his legal fees to defend the breach of fiduciary duty claims against him. Plaintiffs also assert that Williams's invocation of the indemnification Agreement is not one "as permitted by law," and therefore violative of ERISA. Plaintiffs' contention is that Williams cannot claim, on the one hand, that he is not a fiduciary of the Fund, and, on the other hand, claim that he is entitled to benefits only available to such a fiduciary. Plaintiffs argue that ERISA bars indemnification of a fiduciary who has breached his or her fiduciary duty. At oral arguments on the motion, plaintiffs also contended that advancing Williams his attorneys' fees would be a "loan" in violation of ERISA.

Williams filed a reply to plaintiffs' resistance on November 28, 1994, in which he argued that the cases upon which plaintiffs rely involve denial of attorneys' fees under the indemnification agreement once liability for breach of fiduciary duty has been found, or denial of advancement of attorneys' fees because of a factual dispute concerning contractual entitlement, both situations Williams asserts are absent here.

The court held oral arguments on this and other motions pending in this matter on September 27, 1995.1 At the hearing, plaintiffs were represented by counsel John O'B. Clark of Highsaw, Mahoney & Clarke, P.C., Washington, D.C. and Roger Stone of Simmons, Perrine, Albright & Ellwood, L.L.P., Cedar Rapids, Iowa. Defendant Edward I. Williams was represented by Joseph F. McDonough of Manion, McDonough & Lucas, P.C., Pittsburgh, Pennsylvania.

Before turning to the factual background for this motion and the court's legal analysis, the court must first identify the standards applicable to disposition of a motion for summary judgment.

II. STANDARDS FOR SUMMARY JUDGMENT

The Eighth Circuit Court of Appeals recognizes "that summary judgment is a drastic remedy and must be exercised with extreme care to prevent taking genuine issues of fact away from juries." Wabun-Inini v. Sessions, 900 F.2d 1234, 1238 (8th Cir.1990). On the other hand, the Federal Rules of Civil Procedure have authorized for nearly 60 years "motions for summary judgment upon proper showings of the lack of a genuine, triable issue of material fact." Celotex Corp. v. Catrett, 477 U.S. 317, 327, 106 S.Ct. 2548, 2555, 91 L.Ed.2d 265 (1986). Thus, "summary judgment procedure is properly regarded not as a disfavored procedural shortcut, but rather as an integral part of the Federal Rules as a whole, which are designed `to secure the just, speedy and inexpensive determination of every action.'" Wabun-Inini, 900 F.2d at 1238 (quoting Celotex Corp. v. Catrett, 477 U.S. 317, 327, 106 S.Ct. 2548, 2555, 91 L.Ed.2d 265 (1986)); Hartnagel v. Norman, 953 F.2d 394, 396 (8th Cir.1992).

The standard for granting summary judgment is well established. Rule 56 of the Federal Rules of Civil Procedure states in pertinent part:

Rule 56. Summary Judgment

(b) For Defending Party. A party against whom a claim ... is asserted ... may, at any time, move for summary judgment in the party's favor as to all or any part thereof.
(c) Motions and Proceedings Thereon.... The judgment sought shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.

Fed.R.Civ.P. 56(b) & (c) (emphasis added); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 2552-53, 91 L.Ed.2d 265 (1986); Beyerbach v. Sears, 49 F.3d 1324, 1325 (8th Cir.1995); Munz v. Michael, 28 F.3d 795, 798 (8th Cir.1994); Roth v. U.S.S. Great Lakes Fleet, Inc., 25 F.3d 707, 708 (8th Cir.1994); Cole v. Bone, 993 F.2d 1328, 1331 (8th Cir.1993); Woodsmith Publishing Co. v. Meredith Corp., 904 F.2d 1244, 1247 (8th Cir.1990); Wabun-Inini, 900 F.2d at 1238 (citing Fed.R.Civ.P. 56(c)).2 A court considering a motion for summary judgment must view all the facts in the light most favorable to the nonmoving party or parties, here the plaintiffs, and give the plaintiffs the benefit of all reasonable inferences that can be drawn from the facts. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986) (quoting United States v. Diebold, Inc., 369 U.S. 654, 655, 82 S.Ct. 993, 994, 8 L.Ed.2d 176 (1962)); Munz v. Michael, 28 F.3d 795, 796 (8th Cir.1994); Allison v. Flexway Trucking, Inc., 28 F.3d 64, 66 (8th Cir.1994); Johnson v. Group Health Plan, Inc., 994 F.2d 543, 545 (8th Cir.1993); Burk v. Beene, 948 F.2d 489, 492 (8th Cir.1991); Coday v. City of Springfield, 939 F.2d 666, 667 (8th Cir.1991), cert. denied, 502 U.S. 1094, 112 S.Ct. 1170, 117 L.Ed.2d 416 (1992).

Procedurally, the moving party, here Williams, bears "the initial responsibility of informing the district court of the basis for its motion and identifying those portions of the record which show lack of a genuine issue." Hartnagel, 953 F.2d at 395 (citing Celotex, 477 U.S. at 323, 106 S.Ct. at 2552); see also Reed v. Woodruff County, Ark., 7 F.3d 808, 810 (8th Cir.1993). Williams is not required by Rule 56 to support his motion with affidavits or other similar materials negating the opponent's claim. Id.

"When a moving party has carried its burden under Rule 56(c), its opponent must do more than simply show there is some metaphysical doubt as to the material facts." Matsushita, 475 U.S. at 586, 106 S.Ct. at 1355. The plaintiffs are required under Rule 56(e) to go beyond the pleadings, and by affidavits, or by the "depositions, answers to interrogatories, and admissions on file," designate "specific facts showing that there is a genuine issue for trial." Fed. R.Civ.P. 56(e); Celotex, 477 U.S. at 324, 106 S.Ct. at 2553; McLaughlin v. Esselte Pendaflex Corp., 50 F.3d 507, 511 (8th Cir.1995); Beyerbach, 49 F.3d at 1325. Although "direct proof is not required to create a jury question, ... to avoid summary judgment, `the facts and circumstances relied upon must attain the dignity of substantial evidence and...

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    ...permit the interim payment or advancement of legal fees to a person defending a breach of fiduciary duty claim.Moore v. Williams, 902 F.Supp. 957, 966–67 (N.D.Iowa 1995) (internal citations omitted) (emphasis added); Packer Eng'g, Inc. v. Kratville, 965 F.2d 174, 175–76 (7th Cir.1992) (stat......
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